On August 31, 2017, Judge Amos Mazzant in the United States District Court for the Eastern District of Texas issued an order granting a group of twenty-one states’ and fifty-five business associations’ motion for summary judgment in consolidated cases seeking declaratory and injunctive relief against a May 23, 2016 Department of Labor rule drastically increasing the minimum salary an employee must earn to qualify for the most common exemptions from the federal overtime laws. The rule was originally scheduled to go into effect on December 1, 2016 and would have increased the minimum salary an employee must earn to qualify for the administrative, executive or professional exemption from federal overtime requirements from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The rule also would have provided for automatic increases to the minimum salary level every three years. Judge Mazzant had issued a nationwide preliminary injunction on November 22, 2016 delaying implementation of the Department of Labor’s new minimum salary rule, finding that it was likely unlawful and would cause irreparable harm to the plaintiff states and business groups. Judge Mazzant’s August 31, 2017 order confirms the findings in the November 22, 2016 preliminary injunction and represents a final decision at the district court level that the Department of Labor’s May 23, 2016 minimum salary rule is illegal and void.
Continue Reading Federal Court Strikes Down Department of Labor’s Overtime Rule

[UPDATE] On December 29, 2016, the New York State Department of Labor (“NYSDOL”) adopted its proposed rule increasing overtime exempt salary thresholds for New York employees. The new rule is
Continue Reading Update: New York State Department of Labor Proposes Increases to Overtime Exempt Salary Threshold

On November 22, 2016, a federal court in the Eastern District of Texas issued a preliminary injunction blocking the Department of Labor from enforcing new regulations that would have drastically reduced the number of white collar employees who are exempt from overtime.  The disputed regulations were set to take effect on December 1.
Continue Reading Texas Federal Court Blocks New Salary Restrictions for Exempt Employees

[UPDATE] On December 29, 2016, the New York State Department of Labor (“NYSDOL”) adopted its proposed rule increasing overtime exempt salary thresholds for New York employees. The new rule is set to take effect in just two days on December 31, 2016. The NYSDOL made no changes to the version of the proposed rule published on October 19, 2016 and discussed in this article. Employers in New York should plan to comply with the new overtime salary thresholds as outlined below on January 1, 2017. The United States Department of Labor’s proposed rule to increase the national overtime exempt salary threshold is still under a nationwide preliminary injunction and is set to be decided in the first half of 2017.  However, this preliminary injunction had no effect on the December 31, 2016 effective date of the New York State rule.
Continue Reading New York State Department of Labor Proposes Increases to Overtime Exempt Salary Threshold

On July 22, 2015, Governor Brown signed AB 2535 that clarifies which employees for whom an employer must track hours worked and record those hours on their wage statements.  The bill will become effective January 1, 2017.

Prior to this amendment, Labor Code section 226 required that an employee’s paystub include hours worked for all employees except individuals who are paid “solely” by salary and are “exempt from payment of overtime” under Labor Code section 515(a) or the governing wage order.  As written, this seemed to require hours on the paystub for exempt outside sales people and executives who are not paid solely by salary but receive bonuses and stock options even though these employees do not record hours worked and hours worked is not a relevant figure when calculating their wages.  In fact, in Garnett v. ADT, LLC, 139 F. Supp. 3d 1121 (2015), the district court held that exemption in Labor Code section 226 did not apply to exempt outside salespersons since they were paid solely by commission (and not salary) and, therefore, had to have their total hours worked included on their paystubs.  The Garnett court noted in its decision that, “[w]hile the usefulness of reporting total hours worked for employees paid solely by commission is not entirely clear, it is nonetheless required by Labor Code Section 226 (a).”


Continue Reading Governor Brown Signs Bill Clarifying Wage Statement Requirements for Exempt Employees

In March 2014, President Obama signed an executive order directing the Department of Labor to revise its aging rules governing overtime pay for white collar employees.  The Department solicited comments from the public on an earlier draft in July 2015.  Yesterday, the Department of Labor released the final version of the new rules.  The new version includes a number of changes—some expected, but others less so.
Continue Reading DOL Makes Last-Minute Tweaks to New Overtime Exemption Rules

On Monday, July 6, 2015, in response to a March 2014 executive order signed by President Obama, the Department of Labor (“Department”) published a Notice of Proposed Rulemaking (“NPRM”) that will more than double the minimum salary necessary for a worker to be classified as “exempt” from the Fair Labor Standards Act (“FLSA”) overtime regulations.  It is estimated that over 5 million, currently exempt, salaried employees will be affected by the increased salary threshold. 
Continue Reading 60-Day Public Comment Period Commences On Proposed FLSA Overtime Exemption Rule Changes

In 2004, the DOL revamped its regulations regarding the Fair Labor Standards Act (FLSA) administrative exemption.  In 2006, the Bush DOL issued an opinion letter finding that mortgage loan officers qualified for the administrative exemption.  In 2010, the Obama DOL withdrew the 2006 opinion letter and issued an Administrator’s Interpretation finding that mortgage loan officers did not qualify for the administration exemption.  The Mortgage Bankers Association’s (MBA) challenged the 2010 interpretation arguing that it was invalid under Paralyzed Veterans of America v. D.C. Arena L.P., 117 F.3d 579 (1997) because it significantly altered the DOL’s 2006 opinion letter and it was issued without employing the notice-and-comment procedures required by the Administrative Procedures Act (APA).  The district court rejected the argument, finding that the MBA had not demonstrated substantial and justifiable reliance on a well-established agency interpretation. The D.C. Circuit reversed, finding that reliance is but one factor courts must consider in assessing whether an agency interpretation qualifies as definitive. 
Continue Reading U.S. Supreme Court Holds Agency Interpretations Are Not Subject To Notice-and-Comment Rulemaking Requirement

On July 14, 2014, the California Supreme Court held in Peabody v. Time Warner Cable, Inc. that employees qualify for the California “commissioned employee” exemption in a pay period only if they receive “earnings [that] exceed one and one-half (1-1/2) times the minimum wage” in that two-week pay period.  The Court held that an employer may not satisfy the minimum earnings prong of the exemption by reassigning wages from a different pay period for employees who are paid commissions that are calculated monthly.  In addition, as explained below, while the Court expressly declined to address the issue, its reasoning will lead plaintiffs’ counsel to argue that more than half of an employee’s pay in a pay period must “represent commissions” if the employee is to meet the exemption in that pay period.
Continue Reading California Supreme Court Limits Application of Commissioned Employee Exemption

By Thomas Kaufman and Jason Guyser

On January 28, 2013, Hon. George King of the United States District Court for the Central District of California issued an order in Pedroza v. PetSmart, Inc. denying class certification of exempt misclassification claims brought by a former PetSmart store manager. The opinion is interesting in that it contains a detailed examination of certification requirements pursuant to Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011). The analysis Judge King employed would lead to denial of certification in many exemption cases. However, Judge King separately ruled that the case could proceed as an uncertified PAGA collective action, leaving open the possibility that PAGA penalties could somehow be determined notwithstanding the Court’s finding that common issues predominated on the underlying exemption issue.


Continue Reading Plaintiffs Must Offer “Significant Proof” Of A Common Policy Or Practice To Satisfy Commonality Under Rule 23 Post-Dukes

By Thomas Kaufman (follow me on Twitter)

On June 18, 2012, the U.S. Supreme Court issued a 5-4 decision Christopher v. SmithKline Beecham, holding that pharmaceutical sales representatives ("pharma reps") generally meet the FLSA’s outside sales exemption. While there are differences between California and the FLSA concerning the elements of the outside sales exemption, this case dealt with the definition of "selling" under the exemption, which is an area where the two statutes have generally been interpreted as parallel. Accordingly, if Christopher is adopted in California, then pharma reps will qualify as outside salespersons under California law as well. The case is helpful to employers both with respect to the outside sales exemption and with efforts to combat the Obama Administration Department of Labor ("DOL") when it intervenes in wage and hour cases on behalf of the employees.


Continue Reading U.S. Supreme Court Sides With Employers on the Outside Sales Exemption